Startup Phases Defined

My last post mentioned Phases 1, 2, and 3. The definition of each has changed with experience. The budget for each has not.

Phase 1 (once I lost my delusions of grandeur) was simply creating a working e-commerce site and opening for business before Christmas 2005. It cost me about $21,000 to get there.

I’m in Phase 2 now. The objective is to enhance my site as much as possible given the development constraints previously explained, refine my inventory selection, strengthen my brand, and achieve financial break-even. Phase 2 ends when the Sunshop version upgrade is completed, when my current modest development task list is done (or the money runs out), and when Curio City has its first break-even month. The budget for Phase 2 was $10,500, more than half of which is gone.

Despite August’s lamentable sales numbers, I came within $51 of breaking even; with no physical store, my costs are highly scalable. Year to date, I’m $3,867.42 in the red on gross sales of just over $14,000. While I don’t think that Christmas can possibly save the year, I do expect to have my first profitable month – maybe even this month, although September is off to a disappointing start.

Phase 3 begins when my last bank CD matures next May. It will end when that $10,000 is gone. By then, Curio City must be consistently profitable and providing me with dependable paychecks. My main Phase 3 objective is to release Eric from servitude and find a new developer to implement some of my more advanced features. Secondarily, I need to remedy some necessary omissions (like insurance) and employ a part-time helper during the Christmas season.

By the time Phase 3 ends (probably Q1 2008), I’ll know whether Curio City will fly as an exclusively online business, or whether I need to open a physical store...or whether I should just get a respectable job. By then, I’ll have invested all of my money -- $41,000 -- and a couple of years of my life.

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The Boston Gift Show begins tomorrow. If it's at all interesting, that will be my next topic.

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Other Forthcoming Topics:

• SEO: The 900-Pound Gorilla
• Where the Money Came From
• “We” versus “I”
• Good Debt, Bad Debt
• Long-term Prospects
• Planned features

If you're especially interested in any of those subjects, or if you want to suggest something else, please feel free to leave a comment.